Annual Report 2009-2010
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energising lives ANNUAL REPORT 2009-2010 Exploring Opportunities We are committed to expanding our horizons, synergizing efforts to attain excellence and enhance value for our stakeholders. With an inspiring vision as our lodestar, we continually adapt to change, devising novel strategies to succeed in a global environment. We strive to continuously surpass the diverse expectations of our customers, leveraging technology and our enthusiastic workforce to evolve innovative solutions to achieve our desired goals. Energizing lives continues to remain central to all our endeavours. We focus on sustainable development with great importance accorded to social responsibility, health, safety, security and environmental care. We also transcend boundaries in our search for renewable energies, leading to a greener and cleaner future. BPCL …. leaving footprints of excellence. Dear Shareowners, I would like to inform you that 9.5 MMTPA. The grass roots refi nery at Bina costing I will be laying down offi ce on Rs. 11,397 crores, the biggest project ever to be 18th August, 2010 on the expiry of undertaken by BPCL, is ready to be commissioned. my term as Chairman & Managing With this, the group’s annual refi ning capacity will Director. I, therefore, will not have exceed 30 MMT and will give BPCL access to its own the privilege of addressing you at the source of products across the country. Growth in forthcoming Annual General Meeting to market volumes has kept pace with the increase in be held in September. refi ning capacity. Entry into the upstream sector of Exploration and Production has gathered pace, with Over the last 33 years, I have had the BPCL having a presence in six countries across fi ve honour of being a part of the Bharat continents. Results have been very encouraging with Petroleum family and leading the the announcement of two discoveries of oil and gas Organisation as the Chairman & Managing in Brazil and Mozambique respectively. The foray Director since August, 2005. As we enter into gas and alternate sources of energy has been a new decade, BPCL is poised to spread progressing smoothly. The focus on Research & Chairman’s LetterChairman’s its wings and become one of the leading Development will yield results in the days to come. energy companies. These are exciting times The BPCL group is therefore, well poised to reach the for India and BPCL is well placed to make next level in terms of growth and expansion. a signifi cant contribution in meeting the growing energy needs of the country. The recent past has easily been one of the most It is an opportune time for a change of guard challenging periods. The global economy has been and for a new Captain to take charge and experiencing an upheaval, the likes of which have elevate BPCL to an even higher plane in not been witnessed for a very long time. The Indian terms of performance and achievement. oil industry has had to grapple with the problem of volatile crude oil prices, rising under-recoveries on the BPCL has evolved from being an oil refi ning sale of four key petroleum products, severe liquidity and marketing entity to a group having a constraints and rising costs of borrowings. At the same presence, not only across the country but time, it had to fulfi ll its responsibility of meeting the in several parts of the world. BPCL has growing energy needs of the country. It is gratifying to been amongst the fi rst in India to embrace note that the challenging external environment has not cutting edge technology in key areas of been an impediment to BPCL achieving the goals that operations and introduce products and it had set for itself. services aimed at meeting existing and emerging needs of the consumer. It is Overcoming adverse conditions and delivering little wonder then that the BPCL brand excellence has been BPCL’s forte. This has been enjoys one of the highest valuations in possible owing to the composition of its DNA. BPCL the country. considers ‘Innovation’ as the key philosophy driving the business. This has enabled BPCL to have the During the last fi ve years, there have fi rst mover advantage in terms of introducing novel been many major achievements. offerings to meet the emerging customer needs. The processing capacity of Kochi It has also enabled the Organisation to look at Refi nery has been expanded out-of-the-box solutions and process improvements from 7.5 MMTPA to when confronted with the effects of the economic downturn. The ability to innovate fl ows from the by my colleagues on the Board was invaluable. inherent trait of the company to deal with ‘Change.’ Your unstinting support in all our endeavours was In today’s dynamic and volatile environment, crucial in its success, for which I will remain eternally managing change is very important to sustain and grateful. I have no doubt that the coming days will improve profi tability and growth. BPCL also thrives see BPCL scaling greater heights as it continues with on ‘Collaboration,’ both within and outside the its mission of energising lives. organization, thereby facilitating the leveraging of mutual strengths. We have successfully partnered I truly see BPCL becoming the most admired Global with some of the leading companies, particularly Energy Company, innovatively leveraging people in the upstream sector. Within the organization also, and technology. cross-functional teams are at the forefront in all the major initiatives that are undertaken. This work Warm regards, environment has been extremely conducive for ASHOK SINHA achieving excellence. Finally, the ‘Leadership’ talent Chairman & Managing Director developed within the company is one of BPCL’s core strengths. The challenging internal work environment has facilitated the development of a strong pool of leaders. This has not only enabled the development of the next level of leaders, but has also helped in evolving managers with an entrepreneurial spirit. These are unique features which have enabled BPCL to not only cope with challenges, but also emerge stronger. As the economy grows, opportunities are only going to increase. It is important to make calculated moves in the areas of Exploration & Production, Green Power, Research & Development, Customer Responsiveness and Capacity Building. Even as I prepare to lay down offi ce, BPCL is preparing its action plan for the coming years. The entire Organisation, starting with the Board, has been involved in articulating the goals for the next fi ve years till 2015 under Project DreamPlan. Having led the BPCL team and having seen the employees perform from close quarters, I am confi dent of BPCL’s abilities to achieve its ambitious goals in the years ahead. I have been extremely fortunate to work with a committed group of people who have a passion for excellence. The results achieved can be attributed solely to the untiring efforts of every member of the BPCL team. The cooperation and guidance provided ASHOK SINHA Chairman & Managing Director Board of Directors S. RADHAKRISHNAN S. K. JOSHI R. K. SINGH Director (Marketing) Director (Finance) Director (Re neries) P. K. SINHA T. BALAKRISHNAN ALKESH KUMAR SHARMA Addl. Secretary & Financial Additional Chief Secretary,(I&C) Secretary (IP), Advisor, Ministry of Government of Kerala Government of Kerala Petroleum & Natural Gas (up to 29.6.2010) (w.e.f. 30.6.2010) S. K. BARUA RAMA BIJAPURKAR I. P. S. ANAND Director Director Director (up to 30.6.2010) (w.e.f. 28.1.2010) Bankers State Bank of India Union Bank of India Corporation Bank Bank of India State Bank of Patiala Central Bank of India Deutsche Bank Standard Chartered Bank ABN AMRO Bank N.V. ICICI Bank HDFC Bank Ltd. State Bank of Travancore S. MOHAN Indian Bank Director (Human Resources) Industrial Development Bank of India Ltd. BNP Paribas Calyon Bank Auditors B. K. Khare & Co. K. Varghese & Co. A. H. KALRO N. VENKITESWARAN Director Director (up to 28.1.2010) Share Transfer Agents Data Software Research Co. Pvt. Ltd. 22, Sree Sovereign Complex, 4th Cross Street, Trustpuram, Kodambakkam, Chennai 600 024 Registered Office Bharat Bhavan HARESH M. JAGTIANI 4&6 Currimbhoy Road, Director (w.e.f. 28.1.2010) Ballard Estate, Mumbai 400 001 S. V. KULKARNI Company Secretary Group Performance Highlights Contents Chairman’s Letter 2 Board of Directors 4 Bankers, Auditors, 5 Share Transfer Agents and Registered Offi ce Group Performance Highlights 6 Management Team 8 Notice to Shareholders 10 Directors’ Report 16 Management Discussion 28 & Analysis Report Sales turnover at Rs. 133,749.10 crores Comments of C & AG 81 Crude throughput at 23.03 MMT Performance Profi le 82 Market Sales including exports at 30.76 MMT Net profi t at Rs. 1,719.98 crores Auditors’ Report 91 Oil and Gas discoveries abroad show promise Balance Sheet and 96 fi Innovating continuously across the entire value chain Pro t & Loss Account Cash Flow Statement 129 Consolidated Financial 132 Statements Mr. S. Mohan, Director (Human Resources), Mr. S. Radhakrishnan, Director (Marketing), Mr. Ashok Sinha, Chairman & Managing Director, Mr. S. K. Joshi, Director (Finance) and Mr. R. K. Singh, Director (Refi neries). Ms. I. Sasikala Chief Vigilance Officer Mr. K.P. Chandy Regional LPG Manager, Mr. A.K. Bansal Executive Director (Gas) South Management Team Mr. Anurag Deepak Executive Director Logistics Mr. K.V. Shenoy General Manager (Retail) (Retail), Mumbai In-charge, South Mr. B.K. Datta Executive Director Mr. M.M. Chawla General Manager (Supply Chain Optimization) (Pipeline Projects), E&P Mr. D.M. Reddy Executive Director Mr. M.M. Somaya General Manager (Industrial & Commercial) (Brand & Public Relations) Ms. Dipti Sanzgiri Executive Director Mr. M.P. Govindarajan General Manager (Human Resources Development) (Human Resources), Kochi Refinery Mr. E.